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American Airlines (AAL) Posts Narrower-Than-Expected Q4 Loss

American AirlinesAAL fourth-quarter 2021 loss (excluding 2 cents from non-recurring items) of $1.42 cents per share compared favorably with the Zacks Consensus Estimate of a loss of $1.51. Quarterly loss per share was also narrower than the year-ago loss of $3.86.

Operating revenues of $9,427 million skyrocketed 134.1% year over year and also surpassed the Zacks Consensus Estimate of $9,320.1 million. This massive year-over-year jump reflects improving air-travel demand. Revenues increased 5.1%, sequentially, despite omicron-related woes.

Passenger revenues, which accounted for the bulk of the top line (88.9%), increased to $8,382 million from a mere $3,190 million a year ago, driven by strong demand in the year-end holiday period. Cargo revenues improved 19.6% to $341 million, driven by the carrier’s focus on its cargo unit in the coronavirus era. Cargo yield per ton mile rose 11.7% in the fourth quarter of 2021. Other revenues climbed 27.7%.

Total revenue per available seat mile (TRASM: a key measure of unit revenues) increased to 15.43 cents from 12.12 cents a year ago. Passenger revenue per available seat miles (PRASM) surged 42.8% to 13.72 cents in the period. Consolidated yield increased 14.3%.

Reflecting the uptick in air-travel demand, consolidated traffic (measured in revenue passenger miles) rose to 48,982 million in the reported quarter from a mere 21,303 million a year ago. To cater to this buoyant demand, capacity (measured in average seat miles) expanded to 61,105 million from 33,219 million. Consolidated load factor (percentage of seats filled by passengers) increased 16.1 percentage points to 80.2% in the final quarter of 2021. Improvement on the international front was also encouraging with load factor increasing 20 percentage points year over year to 69.6%.

Total operating costs (on a reported basis) escalated 56% to $10,207 million with aircraft fuel expenses and related taxes skyrocketing to $2,196 million from $698 million a year ago. Average fuel price per gallon (including related taxes) climbed to $2.36 from $1.27 a year ago. However, consolidated operating costs per available seat mile (CASM: excluding fuel and special items) declined 25.3% to 13.14 cents. Fuel gallon consumption increased 68.8% to $931 million in fourth-quarter 2021. American Airlines, currently carrying a Zacks Rank #3 (Hold), exited the quarter with $15.8 billion of total available liquidity.

You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

American Airlines expects system capacity for the March quarter to decline in the 8-10% range from the figure reported in first-quarter 2019. Total revenues in the first quarter of 2022 are anticipated to decline in the 20-22% band from the level recorded in first-quarter 2019. Fuel cost per gallon in first-quarter 2022 is expected in the $2.41-$2.46 band. Fuel gallon consumption is expected to be $934 million. CASM excluding fuel and special items is expected to increase in the 8-10% range in the first quarter of 2022 from the number reported in first-quarter 2019.

American Airlines expects 2022 capacity to decline 5% from 2019 levels. CASM excluding fuel and special items is expected to increase roughly 5% from 2019 actuals. AAL expects capex in 2022 to be $2.6 billion ($800 million of non-aircraft capex and $1.8 billion of net aircraft capex).

American Airlines is the third S&P 500 member of the Zacks Airline industry to have released its fourth-quarter 2021 numbers.

On Jan 13, Delta Air Lines DAL kicked off the fourth-quarter 2021 earnings season for the airline stocks on a bright note. DAL reported better-than-expected earnings per share and revenues for the same period. Upbeat air traffic aided results during the holidays.

Due to the omicron-led operational disruptions, Delta expects to incur loss in first-quarter 2022.   DAL management anticipates total March-quarter revenues to recover to 72-76% of the first-quarter 2019 actuals, induced by the omicron impact.

On Jan 19, United Airlines UAL posted a fourth-quarter loss (excluding 39 cents from non-recurring items) of $1.60 per share, narrower than the Zacks Consensus Estimate of a loss of $2.23. Operating revenues of $8,192 million also outperformed the Zacks Consensus Estimate of $7,930.9 million. Both the top and the bottom line improved significantly year over year, courtesy of strong holiday travel demand.

Due to omicron-led turbulence, United Airlines expects first-quarter 2022 capacity to decline 16-18% from the first-quarter 2019 level. UAL estimates total operating revenues to drop 20-25% in the March quarter from the comparable period’s level in 2019.

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